Ericsson suspends ‘affected business’ in Russia indefinitely

Swedish kit vendor Ericsson says it has suspended affected business in Russia indefinitely, having already suspended ‘all deliveries’ to customers in Russia in late February.

The announcement follows the invasion of Ukraine by Russia in late February and subsequent sanctions by numerous countries upon Russia.

The announcement said: “In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely. Ericsson is engaging with customers and partners regarding the indefinite suspension of the affected business. The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave.”

As a consequence it says it records a SEK 0.9 b. provision for Q1 2022 ‘for impairment of assets and other exceptional costs.’ This will be recorded in ‘other operating expenses in segment networks’, and apparently around one third of it will impact cashflow. It is stipulated that this does not include staff redundancy costs.

The exact distinction between the cessation of all deliveries to customers in Russia in February and this announcement which seems to refer to something wider isn’t entirely clear from the release but it appears to imply a shutting down of any offices in the country completely since all staff are apparently being put on paid leave.

Presumably this would effect maintenance and all sorts of other service level agreements with operators and other firms, some of which may be facilitated by external contractors, or not depending on how things were set up. Whether or not this represents a long term, full blown pull out of Russia by Ericsson or something that will be reversed in a few weeks or months will presumably mean operators in Russia may have to start looking elsewhere for infrastructure providers. With the situation changing as quickly as it is, it may be that even Ericsson doesn’t know which of these outcomes re more likely.

We have contacted Ericsson to ask for some clarification on these points, and will update this story with any response.

UPDATE – 12:00 13/4/22: We received the following statement from Ericsson:

“On April 9 2022, the European Union removed the sanctions exemption for public telecommunication networks. The impact from this decision is not yet fully clear, but as a result, we have announced that we are suspending the affected business in Russia indefinitely. We are now communicating with our customers about the implications of this decision, and we will also keep them informed as the situation develops.”

Get the latest news straight to your inbox. Register for the Telecoms.com newsletter here.